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Governance guru Ralph Whitworth is hoping he is able to mobilize as much institutional investor support for the removal of Sprint Nextel Corp. chief executive Gary Forsee as he did seeking the removal of Home Depot Inc. CEO Robert Nardelli earlier this year. According to a Wall Street Journal report, Whitworth has lost confidence in Forsee and wants Sprint Nextel to consider the sale of its fiber-optic networking and long-distance operations.
Key to Whitworth’s success will be his ability to mobilize a large and diverse ownership base at the telecommunications company. Whitworth, who manages the governance-focused activist fund Relational Investors, led a successful campaign to oust Nardelli despite owning only 1.2% of Home Depot stock. Whitworth’s success at Home Depot stemmed, in part, from campaigns launched in 2005 and 2006 by pension fund American Federation of State, County and Municipal Employees to remove Nardelli. To be successful in his effort to remove Forsee or effect the change, Whitworth will again need the support of a large number of institutional investors. Like at Home Depot, Whitworth only owns a 1% Sprint Nextel stake. Sprint Nextel, a company with a $54 billion stock market capitalization, has a large and diverse shareholder base. But Whitworth typically is successful at mobilizing the institutional investors that will be critical for his efforts to gain sufficient leverage to press management into changes. Relations between Whitworth and institutional investors have been strong since the activist governance fund was founded in 1995, in part, with the funding of the public pension fund California Public Employees’ Retirement Fund. Since then, institutions such as CalPERS have often backed his efforts because they understand Whitworth is seeking long-term improvements at the company, rather than some activist hedge fund managers that often seek shorter-term share-enhancement results at the expense of longer-term investors. — Ron Orol See story from The Wall Street Journal (subscription may be required) Ron Orol is a reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World. Tags: deals, m&a, mergers, hedge funds Categories Deal Video
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